Left-leaning Americans who swooned over Obama’s promise of “hope and change” now feel brutalized by change and are hemorrhaging hope.
Many who greeted Chinese President Xi’s rise to power with optimism that he would open China’s economy and liberalize the society have reacted with increasing alarm as he’s clamped down on dissent and tightened the central government’s grip on the economy.
And those who only recently professed such faith that emerging markets would advance their march toward democracy and transparency, felt powerless and defeated as they watched swaths of the world retreat from those noble ideals. For many, 2017 was a very dark year.
The warning signs of 2017 persist, especially for the developed world, and Trumpian trade-war tremors may spell trouble for 2018. Or they may not.
But we’re not here to prognosticate on politics or populism. This magazine, and this section in particular, look only at corporate investment facts and figures, at economic growth and job creation, and at those corners of the world that enjoyed the most success on those metrics alone. For the global economy, 2017 was a very good year indeed.
FDI Down, Trade War Fears Up
UNCTAD’s Global Investment Trends Monitor reports that global FDI fell by 16 percent in 2017, to about $1.52 trillion. Developed countries took it on the nose, with FDI inflows slumping by 27 percent into Europe and by a whopping 33 percent into North America.
Australia bucked the trend, increasing its FDI by 11 percent, while FDI to developing economies remained stable, at an estimated US$653 billion, a marginal increase of 2 percent over 2016.
The UNCTAD report goes on to note that, “Flows rose marginally in developing Asia and Latin America and the Caribbean, and remained flat in Africa. Developing Asia regained its position as the largest FDI recipient region in the world, followed by the European Union and North America.”
The report went on to say, “In the world’s transition economies, FDI declined by 17 percent to an estimated US$55 billion, mainly due to a drop in the Russian Federation and lackluster inflows across most of the Commonwealth of Independent States (CIS).”
Perhaps most alarmingly, greenfield FDI projects plummeted 32 percent to US$571 billion, their lowest level since 2003. This does not bode well for the future.
Yet even with dramatically reduced FDI into North America and Europe, most countries in those regions saw strong economic growth, booming stock markets, drops in unemployment and some of the most significant increases in wages since 2007.
Will this last? Like him or hate him, one must credit Donald Trump for being one of those rare politicians genuinely determined to follow through on campaign promises, regardless of how bad the ideas might have been. He doesn’t let pesky things like facts get in the way of a deeply held belief, and he deeply believes that the US not only wants a trade war but will win one decisively.
Is he right?
My friend Peter Zeihan, world-renowned geopolitical strategist and author of the best sellers The Accidental Superpower and The Absent Superpower, thinks he is. Peter is one of the few global experts out there making the case that the US can weather a trade war just fine.
“I need to start out by correcting what most commentators have been tossing out there.” says Zeihan. “At the core, Trump isn’t wrong. When your country runs massive trade deficits and is functionally energy and agriculturally independent, you have far more options, flexibility and power when prosecuting trade wars.
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“The US economy is the least internationally linked of the significant powers,” he continues. “The fractions vary widely based on whose data you’re using, but as a rule the American economy is roughly one-third as dependent upon exports as the major Asian or European economies.”
Zeihan acknowledges that the US will feel some pain, but says it’ll be nothing compared to what the targets of our tariffs feel.
“It isn’t that the Chinese can’t hurt the Americans on trade, it’s just that they can’t without also causing themselves catastrophic damage. It is an America-sneezes-China-gets-Ebola sorta thing. China is a massive exporter to the American market, but the converse is not true. In any trade conflict the Chinese get hosed economically.” (Editor’s note: “hosed” being the formal term economists apply.)
Whatever your position, 2018 promises to be an interesting year. Watch this space.
While it’s prudent to look with anxiety at these events, for now let’s celebrate the year that was, recognize the countries that excelled in growing investment and job creation in 2017, and applaud the Investment Promotion Agencies working round the clock to deliver that success.
The 10th annual Global Best to Invest Awards are based in part on capital investment into private-sector facilities in each country (total projects and per capita projects) as compiled by Conway Analytics. Qualifying projects are corporate facility investments (from both FDI and domestic expansion) that contribute to the well-being of the areas in which they are made by meeting at least one of the following three criteria:
The following four data sets are also used to compile these proprietary rankings:
No amount of anxiety about Trump, trade, China or Brexit — about the many challenges that lie ahead — can diminish the triumphs we celebrate in this issue. We congratulate the countries recognized by these awards, the companies whose growth fueled this success, and the hard-working women and men whose lives are so directly and positively impacted by all this economic activity.